Description

1. The federal budgetYear19982000200220042006Revenu ExpenditurRev as %Exp as %esesGDPGDPGDPDeficit17221653874720%19%6920251789981721%18%236185320111047018%19%-158188022931168616%20%-413240726551317818%20%-248Government's budget was in deficit in 2002, 2004 and 2006In 2002, Public debt increases by 1%Impact of income tax cut on aggregate supply (SRAS) and aggregate demand curvesdemand sideImpact of income tax cut on aggregate supply (SRAS) and aggregate demand curvesSupply sideSupply side policy1. Income tax cut2. Increases supply of labor3. Aggregate supply shifts out to the right4. Real GPD increases and price level decreasesDemand side policy1. Income tax cut2. Increases consumption spending3. Aggregate demand shift to the right4. Real GDP increases and price level increases7. Understanding marginal and average tax rates.Under Plan A500- since it does not go above the 1,000 limit it will be taxed at 20%. The 20% is your marginal taxAND your average tax since it did not go above the limit1,500- since it does go above the...